$10 Million Hippie: How a Strategic Pivot Resurrected a Business in Inventory Hell

After launching Military Hippie in late 2016 — a women’s apparel brand that puts a modern spin on classic fashions — Karolyn Fox scaled the company from zero to $1.25 million before the year closed and then to over $6 million in 2017.

In 2018, the breakthroughs have continued, including …

Conversion rate lift by 32% YoY

Returning customer rate by 99% to 21.7%

Average order value (AOV) by 3%, topping $79

Revenue by 97% and being on track to hit $10MM

It’s five in the morning when something catches Karolyn Fox’s eye …

She has already created a dozen Facebook ads from her home office hours before most people wake up. But on this particular morning, she’s distracted.

Why? Perfection.

“We have the most dedicated employees,” Fox says. “They love the brand and are all peace loving hippies on a mission to help women in distress.”

Fox and her team finally had the robust inventory and warehouse management tools necessary to scale Military Hippie to $10 million in sales a year. It wasn’t that long ago, however, she found herself in inventory hell and on the brink of failure.

The Entrepreneurial Grim Reaper

She collapsed onto the bed in a heap …

It was certainly a soft place to land, but the hard times visiting Fox would require more than just a dark bedroom to overcome.

“I just laid there for a week. I didn’t know how I was going to pay the interest. I needed a break and didn’t know if I was going to be able to do this anymore.”

The clothing Fox had dreamed of selling online had begun piling up in her home; no one was buying and Fox had run up thousands of dollars of debt on her credit cards to get the company off the ground. Hiding from the world just seemed easier.

It was on that bed Fox came face to face with the entrepreneurial grim reaper. The choice: to give up or keep at it?

Evolving Beyond the Leg

It started with a leg …

Fox began marketing organic athletic leggings with little success.

“It just wasn’t working,” Fox recalls of the leggings. “It was like we were targeting a super niche that just didn’t have enough people.”

So Fox and her marketing chief, Nikki Sequeira, broadened their focus. The idea was to offer wardrobe staples, sweaters and jackets, to a target market comprised of strong salt-of-the-Earth women who value comfort.

These women are inspired to live the lives they want to lead, rather than uncomfortable suits or tight dresses that is the trend or norm for today, but not necessarily enabling them to live at their best.

“We don’t want to be just another sweater or jacket brand,” Sequeira says. “We want to be the brand that makes your favorite sweater or jacket.”

That’s how Military Hippie was born. But where’d that name come from?

“We like camo prints which definitely appeals to people with ties to the military,” Fox says. “And the free-flowing nature of our clothing attracts hippies so we put the two together, military and hippies, and decided that would be our name.”

It seemed like a unique idea that just might work …

The days that followed Fox’s bedroom hiatus would make or break her and the company. Instead of giving up Fox gave all she had to studying successful ecommerce merchants.

She took Tanner Larsson’s Build Grow Scale seminar to learn how to target and scale social media ads. Armed with this knowledge, she reverse engineered a course of action she hoped might yield the kind of success for which she had always dreamed …

A high-growth ecommerce business that would eliminate the inventory piling up in her home, pay off the growing credit card bills, and reverse months of lackluster sales performance.

However, what Fox never saw coming led to the biggest breakthrough.

Military Hippie, after doing just a couple thousand dollars a month or so in sales over several months, recently made a sound Fox still can’t stop hearing.

Outsmart Facebook? Don’t Even Try

“Boom!” That’s what sales sound like when they explode.

At least that’s how Fox describes the growth Military Hippie experienced seemingly overnight. Of course, as most overnight success stories go, this one didn’t really happen by chance or luck.

“We became Facebook and Instagram advertising masters,” Fox says with a laugh. “Most people worry too much about ad copy but we focus more on quality images and targeting and allow Facebook to suggest ways to broaden our reach. Remember, you’re not smarter than Facebook.”

It’s sage advice backed by numbers …

Upon sharpening its digital advertising skills, Military Hippie went from generating roughly $1,500 in sales in October 2016 to:

$400,000 in November 2016

$1.25 million by the end of 2016

$272,000 in the first week of January 2017

“It’s incredible to wake up in the morning and see we’ve already done tens of thousands of dollars in sales,” Sequeira says. “People are falling in love with the brand.”

Initially, employees fulfilled orders at Fox’s home. But when growth accelerated Military Hippie moved into a warehouse, which it soon outgrew- and needed an even bigger warehouse.

“To be honest we’re not in shock but it is a bit overwhelming to take in,” Fox says. “I have amazing workers who have never taken a day off. It’s why I’m giving out bonuses and raises every other week.”

Fox also credits Military Hippie’s success, in part, to Shopify Plus, an enterprise level ecommerce solution for high volume merchants. Military Hippie upgraded to Plus to keep up with demand and chose Shopify knowing the platform can scale grow right alongside the brand.

Shopify is the best thing I’ve ever discovered,” Fox says. “It’s easy to use and gives me full control over my business.

But success revealed something that nearly sent Fox back to the dark bedroom: the company’s business model was broken.

The Big Pivot and the Big Results

Ecommerce companies that scale rapidly generally have a robust inventory management system. Unfortunately, the system operating at Military Hippie resided solely in the brains of Fox and her employees tasked with picking and packing.

“We did it all from memory,” Fox says with a laugh.

In place of SKUs were descriptions like “Amelia Top.” Fox and her employees knew right where the tops — and each of the company’s products — resided in the warehouse but, in a hurry, might grab the wrong size and fulfill the order incorrectly.

That’s if Military Hippie had inventory in stock …

Hippie dresses and chic collections were just one part the brand’s success

Demand routinely outstripped supply and Fox regularly found herself with thousands of orders to fill but no inventory. The reliance on memory rather than a robust system combined with regular stockouts resulted in the type of inventory hell from which many never recover.

“We had to change the business model,” Fox says. “That said we’ve had ten business models so far. We just keep evolving as we grow.”

Before launching a product today, Fox’s team tracks how similar products have sold in the past, predicts likely future demand, and has a significant amount of inventory on hand prior to launching a marketing blitz.

The company also traded its sharp memory for SKULabs, a multi-channel inventory and warehouse management system to optimize its new 4,000 square foot warehouse. With SKUs, scanners, and a new V.P. of Operations plucked from Wall Street, Military Hippie no longer makes the inventory and fulfillment mistakes it once did.

“We’re operating like a major corporation now,” Fox says. “I used to be so embarrassed when we’d make mistakes. I felt like I was on my own. But with the right team and technology, we can now scale ten products at once rather than just one.”

The team also includes a sharp-eyed fashion buyer who scours the globe for items that can quickly be tested on Instagram and offered for sale if popular. The technology stack Fox describes also includes …

Yotpo, a commerce marketing cloud offering, that collects and features Military Hippie’s customer reviews, ratings, UGC marketing, loyalty, as well as referrals.

Reviews are highlighted across Military Hippie

In one recent 30-day period, visitors who engaged with Yotpo content on Military Hippie converted at nearly 900% higher than visitors who did not

Instant Search+ for a prominently displayed onsite search bar that includes visual merchandising, error tolerance, and powers suggest recommendations for Amazon-like bundles, upsells, and discounts which Fox credits with helping lift AOV to more than $79.

Emphasis has also been placed on high-quality product photography as evidenced by a recent five-figure photo shoot in San Francisco complete with models, professional lighting, and a renowned photographer.

That same commitment to high-quality imagery is evident across its product pages as well.

Fox credits the business pivot — along with the aforementioned tools and team — for helping Military Hippie post impressive 2018 results:

Conversion rate increased by 32% YoY

Returning customer rate jumped 99% YoY to 21.7%

Average order value (AOV) increased by 3%, topping $79

Revenue increased 97% in 2018 and is on track to hit $10MM shortly

“It’s not about the money,” Fox insists. “It’s about the mission and charity.”

The company just donated $150,000 worth of clothing to Women in Distress, the only nationally accredited and state certified full-service domestic violence center in Broward County, Florida and aims to stop domestic violence abuse through intervention, education, and advocacy.

In support of that, Military Hippie aims to empower women by donating clothing they can feel good about and may not have access to otherwise.

“We want to make these women feel beautiful inside and out,” Fox says.

The impact Military Hippie is having on distressed women is only possible due to Fox’s decision to pivot the business model and make the company operationally excellent.

It’s the type of discipline you might expect from someone who has been working non-stop since that week-long stay in bed. Ironically, her bed is now one place where Fox doesn’t spend enough time.

“Yes, I think I need another week in bed after this whirlwind.”

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About the Author

Nick Winkler is a contributor to the Shopify Plus blog and founder of The Winkler Group, a strategic communications firm that provides content marketing services to the world's best-known brands, businesses, and marketers. Get more from Nick here.